Jazz Pharmaceuticals Announces First Quarter 2018 Financial Results
"The first quarter was highlighted by strong revenue growth, cash flow generation and execution across the organization that led to significant progress toward our 2018 goals," said
GAAP net income for the first quarter of 2018 was
Adjusted net income for the first quarter of 2018 was
Financial Highlights
Three Months Ended |
||||||||||
(In thousands, except per share amounts and percentages) |
2018 |
2017 |
Change |
|||||||
Total revenues |
$ |
444,613 |
$ |
376,053 |
18 |
% |
||||
GAAP net income |
$ |
45,991 |
$ |
86,511 |
(47) |
% |
||||
Adjusted net income |
$ |
182,371 |
$ |
141,222 |
29 |
% |
||||
GAAP EPS |
$ |
0.75 |
$ |
1.41 |
(47) |
% |
||||
Adjusted EPS |
$ |
2.98 |
$ |
2.31 |
29 |
% |
Total Revenues
Three Months Ended |
|||||||
(In thousands) |
2018 |
2017 |
|||||
Xyrem® (sodium oxybate) oral solution |
$ |
316,777 |
$ |
272,326 |
|||
Erwinaze® / Erwinase® (asparaginase Erwinia chrysanthemi) |
50,627 |
51,388 |
|||||
Defitelio® (defibrotide sodium) / defibrotide |
35,061 |
35,900 |
|||||
Vyxeos® (daunorubicin and cytarabine) liposome for injection |
26,228 |
— |
|||||
Prialt® (ziconotide) intrathecal infusion |
6,126 |
7,717 |
|||||
Other |
6,028 |
6,347 |
|||||
Product sales, net |
440,847 |
373,678 |
|||||
Royalties and contract revenues |
3,766 |
2,375 |
|||||
Total revenues |
$ |
444,613 |
$ |
376,053 |
Total revenues increased 18% in the first quarter of 2018 compared to the same period in 2017 due to an increase in net product sales of Xyrem and the launch of Vyxeos.
Xyrem net product sales increased 16% in the first quarter of 2018 compared to the same period in 2017.
Erwinaze/Erwinase net product sales in the first quarter were consistent with the same period in 2017. The company is currently experiencing supply disruptions and expects that there may be further supply challenges during 2018.
Defitelio/defibrotide net product sales in the first quarter of 2018 were consistent with the same period in 2017. The company continues to expect inter-quarter variability in Defitelio net sales given that veno-occlusive disease is an ultra-rare disease.
Vyxeos net product sales were
Operating Expenses
Three Months Ended |
|||||||
(In thousands, except percentages) |
2018 |
2017 |
|||||
GAAP: |
|||||||
Cost of product sales |
$ |
33,919 |
$ |
25,065 |
|||
Gross margin |
92.3 |
% |
93.3 |
% |
|||
Selling, general and administrative |
$ |
207,213 |
$ |
144,255 |
|||
% of total revenues |
46.6 |
% |
38.4 |
% |
|||
Research and development |
$ |
62,667 |
$ |
44,928 |
|||
% of total revenues |
14.1 |
% |
11.9 |
% |
|||
Three Months Ended |
|||||||
(In thousands, except percentages) |
2018 |
2017 |
|||||
Non-GAAP adjusted: |
|||||||
Cost of product sales |
$ |
32,225 |
$ |
23,819 |
|||
Gross margin |
92.7 |
% |
93.6 |
% |
|||
Selling, general and administrative |
$ |
131,979 |
$ |
118,450 |
|||
% of total revenues |
29.7 |
% |
31.5 |
% |
|||
Research and development |
$ |
47,292 |
$ |
40,786 |
|||
% of total revenues |
10.6 |
% |
10.8 |
% |
Operating expenses changed over the prior year period primarily due to the following:
- Selling, general and administrative (SG&A) expenses increased in the first quarter of 2018 compared to the same period in 2017 on a GAAP and on a non-GAAP adjusted basis due to higher expenses resulting from expansion of the company's business, including expenses supporting the potential EU launch of Vyxeos and U.S. launch of solriamfetol. SG&A expenses in the first quarter of 2018 on a GAAP basis also included an estimated loss contingency of
$57.0 million related to an ongoingU.S. Department of Justice (DOJ) investigation of our support of 501(c)(3) organizations that provide financial assistance toMedicare patients. InApril 2018 , the company reached an agreement in principle with the DOJ on a proposal for a civil settlement of potential claims relating to the investigation, subject to negotiation of a definitive settlement agreement and other contingencies. - Research and development (R&D) expenses increased in the first quarter of 2018 compared to the same period in 2017 on a GAAP and on a non-GAAP adjusted basis due to an increase in expenses related to the company's ongoing pre-clinical and clinical development programs and regulatory activities. R&D expenses in the first quarter of 2018 on a GAAP basis also included milestone payments of
$11.0 million related to theU.S. Food and Drug Administration's (FDA ) acceptance for filing of the company's New Drug Application (NDA) for solriamfetol.
Cash Flow and Balance Sheet
As of March 31, 2018, cash, cash equivalents and investments were
Recent Developments
In
In
In
2018 Financial Guidance
Revenues* |
$1,880-$1,930 |
Total net product sales* |
$1,865-$1,910 |
-Xyrem net sales* |
$1,320-$1,350 |
-Erwinaze/Erwinase net sales |
$190-$220 |
-Defitelio/defibrotide net sales |
$145-$165 |
-Vyxeos net sales |
$130-$155 |
GAAP gross margin % |
93% |
Non-GAAP adjusted gross margin %1,5 |
93% |
GAAP SG&A expenses* |
$660-$699 |
Non-GAAP adjusted SG&A expenses2,5 |
$525-$555 |
GAAP R&D expenses* |
$232-$255 |
Non-GAAP adjusted R&D expenses3,5 |
$205-$225 |
GAAP effective tax rate |
18%-21% |
Non-GAAP adjusted effective tax rate4,5 |
17%-19% |
GAAP net income per diluted share* |
$6.60-$7.70 |
Non-GAAP adjusted net income per diluted share*5 |
$12.75-$13.25 |
________________________________ |
|
* |
Updated May 8, 2018 |
1. |
Excludes $6-$9 million of share-based compensation expense from estimated GAAP gross margin. |
2. |
Excludes $78-$87 million of share-based compensation expense and $57 million of estimated loss contingency from estimated GAAP SG&A expenses. |
3. |
Excludes $16-$19 million of share-based compensation expense and $11 million of milestone payments from estimated GAAP R&D expenses. |
4. |
Excludes the income tax effect of adjustments between GAAP reported and non-GAAP adjusted net income. |
5. |
See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to Non-GAAP Adjusted 2018 Net Income Guidance" at the end of this press release. |
Conference Call Details
A replay of the conference call will be available through
About
Non-GAAP Financial Measures
To supplement
The company believes that each of these non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors and analysts. In particular, the company believes that each of these non-GAAP financial measures, when considered together with the company's financial information prepared in accordance with GAAP, can enhance investors' and analysts' ability to meaningfully compare the company's results from period to period and to its forward-looking guidance, and to identify operating trends in the company's business. In addition, these non-GAAP financial measures are regularly used by investors and analysts to model and track the company's financial performance.
These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures; should be read in conjunction with the company's condensed consolidated financial statements prepared in accordance with GAAP; have no standardized meaning prescribed by GAAP; and are not prepared under any comprehensive set of accounting rules or principles. In addition, from time to time in the future there may be other items that the company may exclude for purposes of its non-GAAP financial measures; and the company has ceased, and may in the future cease, to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Likewise, the company may determine to modify the nature of its adjustments to arrive at its non-GAAP financial measures. Because of the non-standardized definitions of non-GAAP financial measures, the non-GAAP financial measures as used by
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements, including, but not limited to, statements related to
JAZZ PHARMACEUTICALS PLC |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||
(In thousands, except per share amounts) |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
2018 |
2017 |
||||||
Revenues: |
|||||||
Product sales, net |
$ |
440,847 |
$ |
373,678 |
|||
Royalties and contract revenues |
3,766 |
2,375 |
|||||
Total revenues |
444,613 |
376,053 |
|||||
Operating expenses: |
|||||||
Cost of product sales (excluding amortization of intangible assets) |
33,919 |
25,065 |
|||||
Selling, general and administrative |
207,213 |
144,255 |
|||||
Research and development |
62,667 |
44,928 |
|||||
Intangible asset amortization |
53,007 |
25,665 |
|||||
Total operating expenses |
356,806 |
239,913 |
|||||
Income from operations |
87,807 |
136,140 |
|||||
Interest expense, net |
(20,605) |
(18,844) |
|||||
Foreign exchange loss |
(1,728) |
(1,464) |
|||||
Income before income tax provision and equity in loss of investees |
65,474 |
115,832 |
|||||
Income tax provision |
19,146 |
29,160 |
|||||
Equity in loss of investees |
337 |
161 |
|||||
Net income |
$ |
45,991 |
$ |
86,511 |
|||
Net income per ordinary share: |
|||||||
Basic |
$ |
0.77 |
$ |
1.44 |
|||
Diluted |
$ |
0.75 |
$ |
1.41 |
|||
Weighted-average ordinary shares used in per share calculations - basic |
59,928 |
59,880 |
|||||
Weighted-average ordinary shares used in per share calculations - diluted |
61,178 |
61,178 |
JAZZ PHARMACEUTICALS PLC |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
March 31, |
December 31, |
||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
453,169 |
$ |
386,035 |
|||
Investments |
255,000 |
215,000 |
|||||
Accounts receivable, net of allowances |
281,424 |
224,129 |
|||||
Inventories |
46,384 |
43,245 |
|||||
Prepaid expenses |
27,476 |
23,182 |
|||||
Other current assets |
62,868 |
76,686 |
|||||
Total current assets |
1,126,321 |
968,277 |
|||||
Property, plant and equipment, net |
178,920 |
170,080 |
|||||
Intangible assets, net |
2,953,146 |
2,979,127 |
|||||
Goodwill |
960,509 |
947,537 |
|||||
Deferred tax assets, net |
38,103 |
34,559 |
|||||
Deferred financing costs |
7,144 |
7,673 |
|||||
Other non-current assets |
22,985 |
16,419 |
|||||
Total assets |
$ |
5,287,128 |
$ |
5,123,672 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
46,933 |
$ |
24,368 |
|||
Accrued liabilities |
240,544 |
198,779 |
|||||
Current portion of long-term debt |
45,117 |
40,605 |
|||||
Income taxes payable |
36,048 |
21,577 |
|||||
Deferred revenue |
6,977 |
8,618 |
|||||
Total current liabilities |
375,619 |
293,947 |
|||||
Deferred revenue, non-current |
13,641 |
16,115 |
|||||
Long-term debt, less current portion |
1,537,044 |
1,540,433 |
|||||
Deferred tax liabilities, net |
382,072 |
383,472 |
|||||
Other non-current liabilities |
192,181 |
176,608 |
|||||
Total shareholders' equity |
2,786,571 |
2,713,097 |
|||||
Total liabilities and shareholders' equity |
$ |
5,287,128 |
$ |
5,123,672 |
JAZZ PHARMACEUTICALS PLC |
|||||||
SUMMARY OF CASH FLOWS |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
2018 |
2017 |
||||||
Net cash provided by operating activities |
$ |
162,359 |
$ |
164,540 |
|||
Net cash used in investing activities |
(47,149) |
(3,574) |
|||||
Net cash used in financing activities |
(47,575) |
(181,674) |
|||||
Effect of exchange rates on cash and cash equivalents |
(501) |
1,740 |
|||||
Net increase (decrease) in cash and cash equivalents |
$ |
67,134 |
$ |
(18,968) |
JAZZ PHARMACEUTICALS PLC |
|||||||
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION |
|||||||
(In thousands, except per share amounts) |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
2018 |
2017 |
||||||
GAAP reported net income |
$ |
45,991 |
$ |
86,511 |
|||
Intangible asset amortization |
53,007 |
25,665 |
|||||
Share-based compensation expense |
24,303 |
25,193 |
|||||
Estimated loss contingency |
57,000 |
— |
|||||
Upfront and milestone payments |
11,000 |
— |
|||||
Expenses related to certain legal proceedings |
— |
6,000 |
|||||
Non-cash interest expense |
10,617 |
5,615 |
|||||
Income tax effect |
(19,547) |
(7,762) |
|||||
Non-GAAP adjusted net income |
$ |
182,371 |
$ |
141,222 |
|||
GAAP reported net income per diluted share |
$ |
0.75 |
$ |
1.41 |
|||
Non-GAAP adjusted net income per diluted share |
$ |
2.98 |
$ |
2.31 |
|||
Weighted-average ordinary shares used in diluted per share calculations |
61,178 |
61,178 |
JAZZ PHARMACEUTICALS PLC |
|||||||||||||||||||||||
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION |
|||||||||||||||||||||||
CERTAIN LINE ITEMS AND OTHER INFORMATION |
|||||||||||||||||||||||
(In thousands, except per share amounts and percentages) |
|||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||
March 31, 2018 |
March 31, 2017 |
||||||||||||||||||||||
GAAP |
Adjustments |
Non-GAAP |
GAAP |
Adjustments |
Non-GAAP |
||||||||||||||||||
Total revenues |
$ |
444,613 |
$ |
— |
$ |
444,613 |
$ |
376,053 |
$ |
— |
$ |
376,053 |
|||||||||||
Cost of product sales (excluding amortization of intangible assets) |
33,919 |
(1,694) |
(a) |
32,225 |
25,065 |
(1,246) |
(a) |
23,819 |
|||||||||||||||
Selling, general and administrative |
207,213 |
(75,234) |
(b) |
131,979 |
144,255 |
(25,805) |
(b) |
118,450 |
|||||||||||||||
Research and development |
62,667 |
(15,375) |
(c) |
47,292 |
44,928 |
(4,142) |
(c) |
40,786 |
|||||||||||||||
Intangible asset amortization |
53,007 |
(53,007) |
— |
25,665 |
(25,665) |
— |
|||||||||||||||||
Interest expense, net |
20,605 |
(10,617) |
(d) |
9,988 |
18,844 |
(5,615) |
(d) |
13,229 |
|||||||||||||||
Foreign exchange loss |
1,728 |
— |
1,728 |
1,464 |
— |
1,464 |
|||||||||||||||||
Income before income tax provision and equity in loss of investees |
65,474 |
155,927 |
(e) |
221,401 |
115,832 |
62,473 |
(e) |
178,305 |
|||||||||||||||
Income tax provision |
19,146 |
19,547 |
(f) |
38,693 |
29,160 |
7,762 |
(f) |
36,922 |
|||||||||||||||
Effective tax rate (g) |
29.2 |
% |
17.5 |
% |
25.2 |
% |
20.7 |
% |
|||||||||||||||
Equity in loss of investees |
337 |
— |
337 |
161 |
— |
161 |
|||||||||||||||||
Net income |
$ |
45,991 |
$ |
136,380 |
(h) |
$ |
182,371 |
$ |
86,511 |
$ |
54,711 |
(h) |
$ |
141,222 |
|||||||||
Net income per diluted share |
$ |
0.75 |
$ |
2.98 |
$ |
1.41 |
$ |
2.31 |
________________________________ |
|
Explanation of Adjustments and Certain Line Items (in thousands): |
|
(a) |
Share-based compensation expense of $1,694 and $1,246 for the three months ended March 31, 2018 and 2017, respectively. |
(b) |
Share-based compensation expense of $18,234 and $19,805, estimated loss contingency of $57,000 and $0 and expenses related to certain legal proceedings of $0 and $6,000 for the three months ended March 31, 2018 and 2017, respectively. |
(c) |
Upfront and milestone payments of $11,000 and $0 and share-based compensation expense of $4,375 and $4,142 for the three months ended March 31, 2018 and 2017, respectively. |
(d) |
Non-cash interest expense associated with debt discount and debt issuance costs for the respective three-month period. |
(e) |
Sum of adjustments (a) through (d) plus the adjustment for intangible asset amortization for the respective three-month period. |
(f) |
Income tax effect of adjustments between GAAP reported and non-GAAP adjusted net income for the respective three-month period. |
(g) |
Income tax provision divided by income before income tax provision and equity in loss of investees for the respective three-month period. |
(h) |
Net of adjustments (e) and (f) for the respective three-month period. |
JAZZ PHARMACEUTICALS PLC |
|
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2018 NET INCOME GUIDANCE |
|
(In millions, except per share amounts) |
|
(Unaudited) |
|
GAAP net income |
$405 - $470 |
Intangible asset amortization |
200 - 220 |
Share-based compensation expense |
100 - 115 |
Estimated loss contingency |
57 |
Milestone payments |
11 |
Non-cash interest expense |
40 - 50 |
Income tax effect of adjustments |
(60) - (75) |
Non-GAAP adjusted net income |
$780 - $815 |
GAAP net income per diluted share |
$6.60-$7.70 |
Non-GAAP adjusted net income per diluted share |
$12.75-$13.25 |
Weighted-average ordinary shares used in per share calculations |
61 |
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SOURCE
Investors: Kathee Littrell, Vice President, Investor Relations, Jazz Pharmaceuticals plc, Ireland, +353 1 634 7887, U.S., +1 650 496 2717, or Media: Jacqueline Kirby, Vice President, Corporate Affairs & Government Relations, Jazz Pharmaceuticals plc, Ireland, +353 1 697 2141, U.S., +1 215 867 4910